Europe Recovers after Credit Suisse Writedown

European markets have recovered in the past two hours after a rough start.

Credit Suisse roiled the markets early, as it announced $2.85 billion in writedowns, just a few days after posting relatively strong fourth-quarter profit. They will be cutting bonuses and much of that writedown will be covered by tax credits. Still, it will wipe $1 billion off of profits from the first quarter. Remarkably, they say they will still be profitable.

Credit Suisse is down 4.15 percent pre-open, but other banks like ING are up 9 percent, AXA up 6 percent in pre-open trading here.

In the U.S., futures have been rallying for the past couple hours. Traders note a combination of factors: 1) Europe holding up fine yesterday, and recovering from a brief dip this morning, 2) U.S. markets held up Friday and didn’t break in the face of bad consumer confidence, 3) further signs of bond market weakness, 4) Wal-Mart Stores okay, 5) a bit of relief regarding monoline restructuring and 5) frustration of shorts to bring the S&P 500 below their January lows (many note that if this continues it could pick up steam).

Finally, there may be a small boost from Cuban dictator Fidel Castro stepping down, but the two most obvious beneficiaries -- Carnival and Royal Caribbean Cruises -- are barely moving.

Elsewhere:

1) Wal-Mart was in-line at $1.02. Outlook in line with expectations $0.70-$0.74 vs. expectations of $0.74. Up 2 percent pre-open.

2) Ambac discussing a plan to raise at least $2B in capital to help it retain its AAA credit rating, according to The Wall Street Journal. The extra cash would likely be a prelude to a trickier and lengthier move: splitting itself into two businesses

3) The chief executive of the nation's largest bond insurer, MBIA , has stepped down and is being replaced by a predecessor in the post: Gary Dunton, 52, has resigned. Joseph (Jay) W. Brown, 59, will be chairman and chief executive officer, roles he held from January 1999 until May 2004. He retired as executive chairman in May 2007.

CNBC's David Faber said he had spoken with Brown and that Mr. Brown was optimistic that a deal might happen in next two weeks with New York State Insurance Commissioner Eric R. Dinallo.

4) Conagra and General Mills both raised guidance, somewhat surprisingly. They cite stronger sales growth, and in the case of General Mills, cost-savings efforts.

5) Iron ore prices still going up: Vale announced a 65 percent increase in 2008 iron ore prices, which could add $10 billion to the company's bottom line. No wonder the Chinese are opposed to consolidation in this business. They also plan to sweeten their bid for Xstrata.